Enquiries increase 20% at property recovery firm

The number of distressed home sellers contacting Property Portfolio Rescue in Q1 2010, were 20% higher than those in Q1 2009.

It says measures outlined in the March Budget, including the first-time buyer Stamp Duty holiday and the small business growth package, have diverted attention from the more severe tax hikes and public spending cuts already in the pipeline.

It believes homeowners already working to tight budgets may also be choosing to ignore the fact that the more important post-Election Budget will hit them much harder.

Those previously only marginally affected by the downturn are now likely to be tipped over edge, falling into debt and mortgage arrears as they underestimate the urgency of tightening their purses.

Repossessions will remain at record levels throughout 2010, with 50,000 forecast.

Nick Hopkinson, director of PPR, says: “As if there wasn’t already enough to contend with as more workers are put on part time or reduced hours and the cost of living soars, homeowners can only face tougher times to come when the post-election Budget exerts its vice-like grip on household finances.

“Worryingly though, Labour’s spin has masked the extent of the impact this will have with a false rosy glow. As a result, homeowners are likely to fail to make the necessary cutbacks and preparations to manage their finances and we are expecting repossessions to remain at record levels at least until the end of the year.

“The housing market is still frozen, with mortgages incredibly difficult to obtain without a huge deposit and blemish free credit rating and prices are only rising in real terms in prime locations, with most of the country seeing stagnation or price falls. With the added uncertainty of a new tax environment round the corner, buyers are sitting on their hands leaving sellers stranded.

“Those in need of a quick sale are having to seek help in order to prevent further financial loss, but for some, it may now be too late.”

He adds: “Maintained at its lowest level on record for over a year, the base rate has been homeowners’ only saving grace, yet if inflation continues to rise fuelled by the Quantitative Easing investment bubble, an increase in interest rates will be needed to keep inflation in-check before the end of 2010.

“The QE programme and other recent government spending initiatives to “save the economy” have been politically motivated and are fundamentally flawed. Every sober homeowner knows you can’t spend your way out of debt, and nor can the Government. Vital credit lending to businesses and mortgages continue to shrink, despite the Government printing money. This is very bad news for UK PLC and amounts to fiscal vandalism on a massive scale.”